Demand and Supply of Labor by Firm A Output MPL Scenario 2 No. of Workers W ME 0 0 1 20 20 250 250 2 50 30 300 350 3 75 25 350 450 4 95 20 400 550 5 110 15 450 650 6 120 10 500 750 1. Firm A above is an example of? Operfectly competitive seller of its output monopolistic seller of its output 2. Firm A in wage scenario 1 is a? O perfectly competitive buyer of labor monopsonistic buyer of labor 3. In wage Scenario 1, how many workers should Firm A hire to maximize its profits? MRPL MR=20 400 600 500 400 300 200 Scenario 1 w = ME 400 400 400 400 400 400

Demand and Supply of Labor by Firm A Output MPL Scenario 2 No. of Workers W ME 0 0 1 20 20 250 250 2 50 30 300 350 3 75 25 350 450 4 95 20 400 550 5 110 15 450 650 6 120 10 500 750 1. Firm A above is an example of? Operfectly competitive seller of its output monopolistic seller of its output 2. Firm A in wage scenario 1 is a? O perfectly competitive buyer of labor monopsonistic buyer of labor 3. In wage Scenario 1, how many workers should Firm A hire to maximize its profits? MRPL MR=20 400 600 500 400 300 200 Scenario 1 w = ME 400 400 400 400 400 400

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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$ MC of Labor P1 Labor Supply P2 P3 P4 VMPL/ Nabor Demand Quantity Labor The information above is from the labor supply and production function for a firm that operates as a monopsony employer. What wage would this firm charge to maximize profit? O P2 P4 О РЗ O P1
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47. What will happen to employment if the government sets a minimum wage at $140? (a) Employment will decrease to 15. (b) Employment will increase to 25. (c) It will have no impact on employment (d) None of the above
1. Consider a firm in a perfectly competitive industry that must decide how much labor to hire (in the short run, i.e., in the background the capital is fixed). The firm’s marginal product of labor is 110-5L. It takes as given an output price P = 2, and the wage = 20. a. Please calculate the optimal quantity of labor for this firm to hire within this setting. b. Would a monopsonist employer in this same situation hire more or less labor? Why? c. Discuss a possible basis for state regulations of employment within 'company towns'.
In the following graph, the product market is whilc the labor market is MFC W. VMP Wa O perfectly competitive: a monopsonist Oa monopoly: competitive A monopoly:amonopsonist perfectly competitive: competitive Rate aage
Policymakers sometimes propose laws requiringfirms to give workers certain fringe benefits, such ashealth insurance or paid parental leave. Let’s considerthe effects of such a policy on the labor market.a. Suppose that a law required firms to give eachworker $3 of fringe benefits for every hour that theworker is employed by the firm. How does this lawaffect the marginal profit that a firm earns from eachworker at a given cash wage? How does the lawaffect the demand curve for labor? Draw your answeron a graph with the cash wage on the vertical axis.b. If there is no change in labor supply, how wouldthis law affect employment and wages?c. Why might the labor-supply curve shift inresponse to this law? Would this shift in laborsupply raise or lower the impact of the law onwages and employment?d. As discussed in Chapter 6, minimum-wage lawskeep the wages of some workers, particularlythe unskilled and inexperienced, above theequilibrium level. What effect would a fringebenefit mandate have…
Quantity Wage Rate Supplied 1 2 3 4 5 $5 10 15 20 S5855 25 Refer to the given supply information facing a single firm in a particular labor market. This labor supply curve demonstrates that Multiple Choice O the firm is selling its output under imperfectly competitive conditions. the firm is selling its output under purely competitive conditions. higher wage rates must be paid to successive workers to overcome their higher opportunity costs. the firm is hiring labor under purely competitive conditions.
11) What is a monopsony? Show the graph of a monopsony with the going wage and number of workers employed.
3 ped Wage Rate W We W 0 Qe Quantity of Labor Multiple Choice Refer to the graph. A monopsonist will set the wage at MRC Wu a rate that cannot be determined from the graph. Wm D₁ = MRP We